Building a business costs money—usually more than you can generate from your operating revenues alone. Securing the funds you need will require careful planning and preparation.

Whether you’re a fully operating business looking to add a new truck to your fleet or build a new location, or if you’re just starting out, you’ll need money to turn your plans into reality. It might help to work with an accountant to calculate estimated costs for reaching the next level of development.

The Basics

Before you borrow, list your basic business expenses. Each time you expand your business, these costs are likely to increase:

Give Yourself Some Credit

One option to increase your funds is to get a line of credit, which is a type of loan that gives you short-term or seasonal funds.

Basically, a line of credit is very similar to a credit card, with the notable exception that interest on a line of credit is lower and may be tax-deductible. You borrow cash, using your business assets as collateral, and pay back the principal and interest on any outstanding balance each month.

A long-term credit loan usually lasts up to five years and is helpful if you want to have money for operating costs until your business turns a profit. Lenders typically require that you provide collateral or sign a promissory note on this type of loan and pay it back in installments. Of course, you should always be wary of getting into unnecessary debt or borrowing more than you can afford to pay back.

Credit Cards

Visa, American Express, and Mastercard all offer credit cards aimed specifically at small businesses. These cards offer lower interest rates than normal credit cards, and often have higher credit limits.

Do You Qualify?

If you’re thinking about taking a loan to build your business, there are several qualifications that banks and investors normally expect from you, as the owner, and your business. Before you apply for a loan, make sure that you can provide potential lenders with the following:

Getting the Loan

You may want to investigate banks that have a history of offering loans to small and growing businesses, since they may be more familiar with your situation and easier to work with.

It’s a good business practice to have a strong relationship with a specific institution, as that could make it easier for you to get loans when you need them. If you don’t use one particular bank or credit union, you might want to open a business banking account or secure small lines of credit before applying for a big loan.

All potential lenders will probably ask how much you are investing personally in your business venture. Among other things, it’s a way to assess your commitment to the business.

All potential lenders will probably ask how much you are investing personally in your business venture.

A Little Help

At Movement Bank, we believe your business is the heart of the community and we want to ensure you succeed. We help small businesses finance basic necessities and offer lines of credit, equipment loans, and commercial real estate loans. To see if you can qualify for a small business loan, you can connect with a Business Banking team to get started.